In re Bush

• Decision Date: 15 March 2002
• Docket Number: No. 01-3151.,No. 01-02958.,01-02958.,01-3151.
• Citation: 275 B.R. 69
• Parties: In re Mikie Raye BUSH, Debtor. Frederick and Emily Buckway, Debtors.
• Court: U.S. Bankruptcy Court — District of Idaho

275 B.R. 69

In re Mikie Raye BUSH, Debtor.

Frederick and Emily Buckway, Debtors.

No. 01-02958.

No. 01-3151.

United States Bankruptcy Court, D. Idaho.

March 15, 2002.

COPYRIGHT MATERIAL OMITTED

Gary L. McClendon, Staff Attorney, Boise, Idaho, for the Office of the U.S. Trustee.

Richard Crawforth, Boise, Idaho, trustee.

MEMORANDUM OF DECISION

TERRY MYERS, Bankruptcy Judge.

I. INTRODUCTION

Mikie Bush represented herself in her chapter 7 case. When Wells Fargo Bank served her with a motion for stay relief on her 2000 Plymouth Neon, she came to court. During the hearing, the Court asked her how she came to believe, as shown on her schedule C, that the car was "exempt" and how she reached the decision to "reaffirm" the Wells Fargo debt as she indicated on her § 521 statement of intention. She replied that Leo Wees, her bankruptcy petition preparer, told her how to complete those forms "because I've never gone to court" and "I didn't know what I was doing."¹ Her further discussion with the Court indicated that she had no idea what an exemption was, much less what exemptions were properly available in Idaho, and that Mr. Wees had provided the statutory authority she put on her schedule C. She had a similar lack of understanding about her options for dealing with secured consumer debt. In all these regards, she obtained advice and assistance from Mr. Wees. Only in this way did she complete her bankruptcy paperwork.

Frederick and Emily Buckway are also pro se chapter 7 debtors. During their case, they were notified of a hearing that was going to be held to consider the motion of Wells Fargo Bank for stay relief regarding their 1997 Pontiac Sunfire. At that hearing, a discussion occurred which was similar in nature and thrust to that occurring in Ms. Bush's case. These debtors also indicated their lack of understanding of the exemption they claimed and related issues, and advised that Mr. Wees also guided them through these issues in order that they could complete their bankruptcy schedules and statements.

As a result of these hearings, the Court issued Orders to Show Cause directed to Mr. Wees. See Doc. No. 10 (Buckway); Doc. No. 16 (Bush).² A hearing was scheduled for December 13, 2001 in order that Mr. Wees could explain exactly what did and did not occur in his role as a bankruptcy petition preparer ("BPP") for these Debtors. Mr. Wees was advised that, in addition to addressing whether he met the requirements and honored the limitations of § 110, the Court would also consider the reasonableness of the $150 fee he charged for his services.

The hearing was held, and Mr. Wees testified at length. He and the U.S. Trustee were allowed, at their request, an extended period for supplementation of the record and for briefing. The matter was fully submitted on February 13, 2002.

The Court concludes that Mr. Wees violated § 110 in several regards, that Mr. Wees engaged in the unauthorized practice of law, and that Mr. Wees' charges for his BPP services were excessive. Appropriate remedies and consequences are imposed. This decision constitutes the Court's findings of fact and conclusions of law on all contested matters. Fed.R.Bankr.P. 9014, 7052.

II. FACTS³

Mr. Wees has a high school education, attended college for 4 years and obtained an associates degree. He has been acting as a BPP for many years, and gained familiarity with bankruptcy paperwork when he ran a photocopy service as a contractor with the Clerk of this Court.

Mr. Wees is the owner and operator of "Self-Help Legal Alternatives," which is the trade name of Self-Help Legal Alternatives of Idaho, Inc., an Idaho corporation. He is the sole employee of that corporation. His business involves preparing and selling pleadings and paperwork for civil legal matters, and is designed to provide individuals with a less expensive alternative to lawyers. While divorces, guardianships, support and custody matters, and wills are part of his product mix, bankruptcies are the major component. Mr. Wees estimated that 33% of his business income is generated through his work as a BPP. He testified that he files 12 to 15 cases a month (144 to 180 per year) at a fee of $150 per case. This would account for $21,600 to $27,000 a year, which is actually closer to 50% of the gross annual income of $50,000 which he claimed to generate.

Mr. Wees has no legal training, and is essentially self-taught in regard to the law. He is also a member of a group known as the "National Association of Independent Paralegals." Mr. Wees pays a fee to belong to this group and attend its seminars. Doing so entitles him to a "certificate" which he has framed and displayed on the wall at his business. According to Mr. Wees, this entity conducts no testing or evaluation before "certifying" an individual.

Mr. Wees meets personally with his potential bankruptcy customers. When such a customer walks into Mr. Wees' business in Boise, he or she passes time in a waiting room. Reading materials include layman's guides to legal issues and similar materials, particularly those from Nolo Press, an entity which publishes some of the resources regularly used by Mr. Wees and which appears, according to his testimony, to have ties to the NAIP.

Mr. Wees indicates that there are numerous signs in his waiting room, many of which allegedly reinforce the message that he is not a lawyer and doesn't provide legal advice. One sign, 3' × 5' in size, announces:

SELF-HELP LEGAL FORMS

Forms, Books and Typing

We are not attorneys.

We do not offer legal advice.

At the same time, customers can peruse various materials of a legal nature, see the name "Self-Help Legal Alternatives" displayed, and admire the framed document indicating Mr. Wees' status as a "certified independent paralegal."

A preprinted disclosure or acknowledgment appears on the first page of Mr. Wees' bankruptcy "worksheet" which he has the customer sign. It states:

The undersigned customer hereby acknowledges that he/she clearly understands that no employee of Self-Help Legal Alternatives is an attorney; that he/she has not sought nor received legal advice; that he/she made all decisions required to prepare the forms relating to this worksheet; that he/she will review all forms prepared from said information; and, that he/she will be totally responsible for all required court filing, appearances and results or consequences.

See Exhibit 4, p. 1.

Mr. Wees asks his bankruptcy customers to bring with them to their meeting documents concerning their finances and recent bills. He extracts debt amounts, creditor addresses, and account numbers from that material, and enters that information into his computer. This data will ultimately be set out on the debtor's schedules of creditors (schedules D, E and F).⁴

The customer is also given a worksheet-type form at the meeting. See Exhibits 1. This worksheet was developed by Mr. Wees. He uses the worksheet, in conjunction with some of the actual schedules and the statement of financial affairs, in analyzing and clarifying the customer's situation. He will go over the schedules and statements line by line, and solicit the customer's answers and information. He believes this lessens the "intimidation" which he believes many people feel when they look at the official bankruptcy forms and contemplate filling it out themselves.

In regard to a customer's property, the "instructions" on the worksheet state:

BANKRUPTCY SCHEDULES "A" (REAL PROPERTY), "B" (PERSONAL PROPERTY) and SCHEDULE "C" (EXEMPT PROPERTY)

The court requires every debtor to list any property owned (whether or not it is paid for or if payments are still being made) on the appropriate "Schedule."

Assuming that any person filing for bankruptcy desires to retain as much of their property as possible, the attached sheets begin by listing the current exemptions, as allowed under Idaho law. If you own any property described by these various exemption rules, then list such property in the appropriate boxes, with a description, the quantity of each, and an estimate of value. At the end of these sheets, there is additional room to list any other property that you own that you have not previously listed.

All of the items listed on the attached sheets will be transferred to Schedule A if it is real property; Schedule B if it is personal property; and also onto Schedule C, if you have listed it under an exempt category.

See Exhibit 1, at p. 1. The worksheet then continues to set out, over the course of 5 pages, numerous categories of property. Each category is identified first by reference to a provision of the Idaho Code⁵ and then is divided into subcategories with descriptions of the type of property potentially exempt. Each of the descriptions follows, according to Mr. Wees, the language of the subparts of the cited Idaho Code provisions.⁶ A place is provided for the customer to indicate the quantity and value of the items fitting the provided descriptions. In certain aspects, entire provisions of the Idaho Code are quoted at length. A place is provided at the end for the customer to:

List any other property that you (or your spouse) own that was not listed under any of the preceding exempt categories.

Id., at p. 7.

The customers will then proceed to fill these out, line by line, as they meet with Mr. Wees, and they do so with his help, guidance and assistance. Mr. Wees explained the nature of his assistance in one of his written submissions:

Respondent [i.e., Mr. Wees] utilizes two methods of assisting the debtor in the determining what property they may legitimately claim as exempt. First, respondent has prepared a worksheet for the debtor, listing all of the common exemptions available to debtors under Idaho Code, Titles 11 and 55. In such worksheet, the current exemptions are listed, word-for-word, with a place after each sub-part to list any property that debtor(s) own, described in such exemption. In the event the debtor owns property not...